Indian entrepreneurs leave outsourcing for firms of their own

(Pic: Sumit Jain, Lalit Mangal and Anshuman Mishra all worked at Oracle before leaving to establish maxHeap, a start-up).

By Anand Giridharadas, IHT

BANGALORE, India: Sumit Jain wanted out of Khatauli, a down-on-its-luck hamlet in northern India. When his father made him work at the family store, he sat at the counter poring over books, lifting his eyes only to make the occasional sale.

Thanks to his own ambition, and to the Indian outsourcing boom, he escaped. He gained admission to the best engineering school in India, then landed a job that he could hardly have dreamed of as a child: writing software for Oracle, the U.S. technology giant.

“I fell in love,” he said, recalling his first visit to Oracle’s campus in Bangalore.

But Jain’s zest eventually fizzled under the repetitive rigors of the Indian back office. So he did what a parade of burned-out functionaries in Bangalore have begun doing: He quit outsourcing to create his own start-up – in his case, designing cellphone software that blocks calls from telemarketers.

Like Jain, some of the best minds in India, trained by leading global companies like Oracle, Yahoo and Microsoft, are slipping out of the back office to build start-ups. And Bangalore, the outsourcing capital, now looks like an incipient Silicon Valley of the East.

“I’m very bullish that there will be a Skype out of India in the next five years,” said Suvir Sajan of Nexus India Capital, a venture-capital fund based in California and India. That sentiment has induced big-name Silicon Valley funds like Draper Fisher Jurvetson and Sequoia Capital to begin aggressively scouring for start-ups in India.

Tech companies in the West often justify outsourcing as a way to export the grunt work, allowing them to focus on innovation at home.

But outsourcing appears to be seeding Bangalore with the potential for innovation. Executives at Western companies concede that they have inadvertently created a breeding ground for future rivals.

“There are tons of really smart people cooking up stuff,” said Ravi Venkatesan, chairman of Microsoft operations in India. “Some of these innovations will eventually blow back and can be a threat to established businesses.”

With that in mind, Venkatesan mentors local entrepreneurs, including former Microsoft managers, to keep them on his side.

The start-up trend is still a few years from bearing multimillion-dollar fruit in Bangalore, investors say. Tech workers here need to develop their business acumen, they say. And there are plenty of other local hindrances.

Power blackouts regularly interrupt programmers in the middle of writing code. Conservative family values tend to discourage young people from abandoning a steady paycheck to pursue what might be seen as a hare-brained scheme.

By any measure, Bangalore remains an outsourcing city. The glass-and-steel campuses of giants like Oracle, IBM, Microsoft and Cisco dominate – the global economy distilled in a few square miles. But a kind of entrepreneurial underground is now flourishing.

Several times a month, unbeknown to their bosses, outsourcing employees slip off campus at dusk and into one of the start-up conclaves that are sprouting. At these meetings, which are like open-mike nights for entrepreneurs, young Bangaloreans trade tips on new technologies and strategies for wooing investors.

The forums have names like BarCamp, Open Coffee Club and TiE; many are local chapters of well-established Silicon Valley clubs, and their growth has been astounding. Since it began in December 2006, BarCamp has signed up more than 600 members, drawn from the back offices of companies like Amazon, Accenture, General Electric and Yahoo.

With so many nurturing start-up dreams, Bangalore has become a city of moonlighters. Tie-wearing programmers for global companies come home from work at night, throw on T-shirts and toil past midnight on their ideas.

“Everyone you meet says, ‘I want to start something,’ ” said Manish Agrawal, who recently did just that.

Agrawal grew up in India, studied computer science at Purdue University in Indiana and returned home in 2004, joining a life-sciences company.

That was just half of his double life. Every night for two months, he and a friend wrote code for four hours, for what became a photo-sharing Web site called Picsquare.

Before long, they quit their jobs and initiated their start-up.

There are hundreds of entrepreneurs like them. Every week, Bangalore seems to spawn a futuristically named company like Mapunity or Mobisy or Motvik.

Yossi Tarablus, an Israeli student who interned in Bangalore this past summer, said he expected “software assembly lines and massive call centers, a city where ideas are implemented, not created.” Instead, he found echoes of Tel Aviv, a start-up haven.

Disparate forces fuel this trend. A buoyant economy is giving many Indians the financial cushion to experiment with start-ups. A bustling consumer market is enticing engineers to invent things for Indians rather than foreigners. The growth of investment in India has made it seem that anyone could get a deal.

Many people with start-ups tell the same story: They joined a global company’s back office in a spell of excitement, and over time came down with outsourcing fatigue.

India’s back offices can be soul-deadening for the very reason they are successful: They slice projects into bite-sized pieces, each to be performed according to strict instructions that make it nearly impossible to err.

“It becomes very monotonous work,” said Parameswaran Venkataraman, who recently started a market-research firm after years in the back offices of U.S. companies like Sapient, Convergys and General Electric.

Another motivation is patriotism. Some engineers in back offices feel guilty about not using their skills to benefit their own penurious country.

“I was getting a lot of comfort in writing a piece of code that was not going to make any difference in the way people were living their lives,” Jain, the former Oracle employee, wrote on his blog.

Jain found quitting to be a rebirth. He and his two partners wrote software around the clock, working and sleeping at one another’s houses, eating Maggi noodles at every meal, relying on coffee and Led Zeppelin albums to keep awake. One of them was so consumed by the work that he stayed awake for days.

Within months, they had released BanKaro, a program that uses social- networking technology to identify and label telemarketers’ calls as spam.

One challenge remains, however. Jain must explain his decision to a hometown that cannot fathom it.

“Most of my friends think that Oracle is the best thing I could ever achieve in my life,” he said. “They thought this was the end of my journey. But it is just the beginning.”

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